A cure for the pipeline? [Red Herring]
MedImmune doubles the size of its corporate venture fund, hoping an increase in external R&D will help fill its pipeline.
February 22, 2005
MedImmune said Tuesday it would double the size of its venture fund to $200 million to attract innovative startups that can help fill its drug and device pipeline.
The company has already invested $85 million in companies since the fund’s creation in 2002. MedImmune’s own research and development spending also ballooned from $156 million in 2003 to nearly $300 million in 2004. The Gaithersburg, Maryland, company develops and markets products for infectious disease, immunology, and cancer treatment.
MedImmune’s corporate venture and R&D expenditures far outstrip that of its competitors because it seeks to augment early-stage intellectual property and partnerships. The new venture boost comes a few weeks after the company stated that its earnings had dropped to $51 million in 2004 from $77 million in the fourth quarter of 2003. MedImmune shares decreased $0.52 to $23.65 in late trading.
The MedImmune Ventures arm has invested in 12 startups, all still years away from bearing cash as they develop potentially lucrative products. The MedImmune portfolio pipeline includes an anti-cancer drug from Critical Therapeutics in Lexington, Massachusetts, and a drug that treats autoimmune diseases such as multiple sclerosis (MS) from Berlin-based startup GenPat77.
The new fund allocation will give the company wider access to the innovations in the venture community, as both a partner and potential acquirer. One of MedImmune’s strongest products, the nasal influenza vaccine FluMistT, came through the 2002 acquisition of Aviron.
“We will continue to use our venture fund as a means by which we can work with such early-stage companies, helping them financially and strategically, while seeking to create value for MedImmune,” Wayne Hockmeyer, president of MedImmune Ventures and the founder of MedImmune said in a statement.
MedImmune’s $200-million fund represents a far larger proportion of its revenues—about 18 percent— than funds at rival biotechs or big pharmas. For example, biotech gorilla AmGen, which had $10.6 billion in revenue 2004 compared with MedImmune’s $1.1 billion, announced its first $100-million venture fund in November, about 1 percent of its revenue. Big pharma company Eli Lilly has funded Lilly Ventures with $175 million since 2001, while its 2004 revenue alone totaled $14 billion.
MedImmune’s R&D-to-revenue ratio (26 percent) is higher than that of established biotech companies. Several biotech and pharma companies, including Genentech, do not release data on their corporate venture funds.
In an unrelated statement, the company announced that former Baxter executive Linda Peters has joined MedImmune’s management team, and that five MedImmune executives have been promoted.
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